China CITIC Bank (601998): Significant asset quality foundation consolidated in retail transformation

China CITIC Bank (601998): Significant asset quality foundation consolidated in retail transformation

The company’s development strategy has shifted from “one body and two wings” to “three drivings”.

In order to cope with the economic transformation and achieve the sustainable development of the company, CITIC Bank has developed from the “one body and two wings” with corporate banks as the main body, retail banking and financial markets as the two wings to the “three driving forces”.

With corporate banking as the supporting point of transformation and relying on traditional business advantages, we will build a customer precise marketing service system and a characteristic product service system; take retail banking as the breakthrough point and provide comprehensive retail services around the diversified needs of individual customers to create good customer serviceSystem; take the financial market as an emerging growth point, build a multi-level financial market product system, innovate service models, and continuously improve the ability to diversify assets and liabilities.

In the process of strategic transformation, the company’s profit structure is more balanced.

In 2018, corporate banks, retail banks, and financial markets accounted for 44 profit before taxes.

6%, 29.

0% and 25.

3%, the weight of the latter two gradually increased.

The company’s retail business transformation has achieved remarkable results.

In 2018, the parent bank’s retail customers exceeded 88.3 million, an increase of 22 per year.

65%; retail asset management scale exceeds 1.

8 trillion, a growth rate close to 20%; credit card transaction volume exceeds 2 trillion, and the inter-bank transaction market share is close to 7%.

Credit resources continued to tilt towards retail business, with increased retail loans accounting for 61% of all new loans; retail loan balances accounted for 42.

9%, continued to reach a new high, an increase of 4 over the end of 2017.

3 units.

Retail profit contribution has further improved, and non-index net income of retail banks has further increased in 2018.

14%, accounting for 63% of non-interest net income.

53%, an increase of 0 from 2017.

86 units.

The company’s asset quality foundation was further consolidated.

Negative identification is more stringent, and the downturn in the economy and deleveraging has led to the company’s double up.

The company’s non-performing loan balance and non-performing loan ratio increased in 2018, and the non-performing loan balance increased from 536 in 2017.

48 million to 640.

28 ppm, with a bad rate from 1 in 2017.

68% rose to 1.

77%.

While striving to control bad supplements, the company continued to invest resources to digest the bad assets.

In 2018, non-performing loans were written off 469.

38 trillion, provision for loan losses 477.

53 trillion, with a total provision of 1,436 in 2016-2018.

3.8 billion US dollars, ranked among the top in the stock market. Although these measures have put pressure on asset quality data in the short term, they will help consolidate the foundation for the company’s sustainable development in the long run.

In the first quarter of 2019, the company’s non-performing ratio fell by 5BP, and the non-performing loan ratio fell short of stabilization.

Earnings forecast and investment rating: We expect CITIC Bank to achieve operating income of 1,780 in 2019-2021.

71 ppm, 1,928.

99 yuan and 2,020.

7.9 billion; net profit attributable to mothers was 481.

04 billion, 533.

71 ppm and 562.50,000 yuan, the corresponding dilutive income is 1.

00 yuan, 1.

11 yuan and 1.

17 yuan.

Although the company’s profitability and growth ability are not outstanding in the stock bank, 西安耍耍网 the company’s operations are quite stable, and the regulatory indicators such as capital adequacy ratio, leverage ratio and liquidity coverage ratio have reached the standards.Too much scale, the company’s relative estimation level is not high, the first coverage, given the “overweight” rating.

Risk factors: 1. The macroeconomic growth rate does not meet expectations and affects asset quality; 2. The cost rises too fast and affects profit levels; 3. The introduction of regulatory policies that are not conducive to industry development.